CFPB seeks $74.5 million in combined redress, civil money penalty from Nationstar Mortgage

Nationstar Mortgage, LLC, would be required to pay about $73 million in redress and a civil money penalty of $1.5 million under a complaint and proposed stipulated order filed Monday by the Consumer Financial Protection Bureau (CFPB) over violations related to mortgage servicing.

The CFPB said Monday’s action against Nationstar Mortgage – reportedly the largest non-bank mortgage servicer in the United States – is part of a coordinated effort among the bureau, a multistate group of state attorneys general, and state bank regulators.

In its complaint, filed in federal district court in the District of Columbia, the CFPB alleges that Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010, violated the Real Estate Settlement Procedures Act (RESPA), and violated the Homeowner’s Protection Act of 1998 (HPA).

Specifically, the bureau alleges that between January 2012 and January 1, 2016, in numerous instances Nationstar failed to identify loans on its systems that had pending loss-mitigation applications or trial-modification plans, and as a result failed to honor borrowers’ loan modification agreements. Nationstar, the bureau further alleges:

  • foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending;
  • improperly increased borrowers’ permanent, modified monthly loan payments;
  • misrepresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled and failed to timely remove private mortgage insurance from borrowers’ accounts; and
  • failed to timely disburse borrowers’ tax payments from their escrow accounts and failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings.

The CFPB said that if entered by the court, Nationstar would be required to immediately set aside about $15.6 million to pay borrowers it has not remediated prior to the order’s effective date and to certify that it has already paid approximately $57.5 million in redress to other borrowers affected by the alleged conduct. The stipulated judgment and order would also require Nationstar, among other things, to enhance its policies and processes, including with respect to handling consumer complaints and disputes, conducting escrow analyses on borrowers’ accounts, transferring information during servicing transfers, offering loss mitigation, and terminating borrowers’ private mortgage insurance.

The bureau said that its own and the states’ proposed judgments and orders, if entered by the court, will yield nearly $85 million in recoveries for consumers to date and over $6 million more in fees and penalties. It said they are also part of a larger government effort, which also includes assistance from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.

Consumer Financial Protection Bureau and Multiple States Enter into Settlement with Nationstar Mortgage, LLC for Unlawful Servicing Practices

CFPB’s complaint

Proposed stipulated judgment and order